Third-party student insurance program.
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In a recent speech to Blue Cross and Blue Shield executives and trustees, the author noted that despite the historic success of Blue Cross and Blue Shield Plans, the future contains challenges arising from an aging population, scarce national resources, and evolving technology. To continue to grow and to meet its customers' needs, he urged Blue Cross and Blue Shield to expand its efforts in several directions: emphasize control of services and costs for the customer; restructure the concept of provider participation; and positively reward providers who exceed minimum standards. He advocated joint ventures between Blue Cross and Blue Shield and nonprofit providers, especially in the area of aged care.
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The Social Security Amendments of 1977 resulted in substantial improvement in the current and projected financial condition of the OASDI program. This article reviews the causes of the recent operating deficits, describes the effects of the amendments that most influence the program's financial status, and gives projections of income and expenditures under the new law. The revised benefit formula eliminates the "over-indexing" expected to occur under the old provisions and results in stable earnings-replacement ratios under practically all future economic conditions. About one-half of the long-range actuarial deficit was resolved by this step alone. Increases in the contribution and benefit base, along with tax-rate reallocations and increases, prevent the imminent depletion of the OASI and DI trust funds. Increased income due to the higher wage bases is partially offset in later years, however, by greater benefit payments based on the increases in the coverage of total earnings. Overall, under the new law the OASDI program is projected to be financed adequately for about 50 years but significant operating deficits are expected after that. The financial condition of the hospital insurance program was substantially unchanged by the amendments, however, and the HI trust fund is expected to be exhausted in 1988.
Medicare's financial problems are rooted in the program's history--from the initial cost-estimating process through successive legislative and administrative actions to control costs. Even more important has been the persistence of several implicit national health care policies, and these are unlikely to change. Frequent readjustments of financing provisions may become a necessity.
Concern for equity of financing among the elderly must not ignore questions of equity between the needs of Medicare beneficiaries and those of the nonelderly . Modest income-related cost-sharing, combined with the merger advocated, might improve fairness , efficiency, and coverage. But fundamental reform must involve new tax policies.
Medicare is financed principally by taxes--some of which burden the general population and others the elderly beneficiaries. Proposals to adjust these revenue sources are evaluated for equity, efficiency, stability, and administrative costs. A package is offered to redistribute the tax burden among all groups; it may also be good health policy.
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